Appointment of trustee_Practical procedure

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This discussion clarifies the practical procedure for appointing a trustee in a Gratuity trust. While the trust deed may grant the employer the power to appoint or remove trustees, Income Tax Rule 110 generally requires prior approval from the Income Tax Department for changes in the trust's constitution. It's advised to follow Rule 110 and obtain the necessary approval from the IT department to ensure compliance.

Anusha Ratnala

Anusha Ratnala (Querist)

06 March 2023 Good Morning!!

I want to know the practical procedure for appointment of a trustee in a Gratuity trust

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

06 March 2023 Trust deed says that the employer has power to appoint the trustee. he can remove any trustee or appoint by giving notice. So under this clause we do not require to take prior approval from income tax authority. Because changing in trustee is not change in provision of trust deed and income tax prior approval require when there is change in provision of trust deed.

Anusha Ratnala

Anusha Ratnala (Querist)

06 March 2023 Dear CA R Seetaraman sir,
Thank you for the reply,
As per rule 110 of Income tax rules 1962, any change in constitution prior approval of Income tax department is required.

So, if the company has the powers as per the trust instrument to appoint a trustee on retirement of another trustee, it can override the rule 110??

kindly reply stating the applicable provisions so that will be helpful for better understanding.
Thank you

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

06 March 2023 Go as per Rule 110 get it approved from income tax department.

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